So long as the marginal propensity to consume out of is greater than that out of profits, any rise in wage rates at the expense of profits will the aggregate marginal propensity to consume-since the marginal propensity to consume out of will receive an increased weight relative to that out of profits-thus raising the level of income that can be supported by a given level of investment and federal expenditure. And the marginal propensity to consume out of will be higher than the marginal propensity to consume out of profits so long as the average wage income is lower than the average profit income, which may be expected. This for two reasons: (1) the marginal tax rate on high incomes is higher than that on low incomes; (2) the evidence shows that the marginal propensity to consume out of disposable income is lower at higher disposable incomes. It is occasionally asserted that wise business policy would favor increasing wage rates at the expense of profits, since the consumption effect would the general level of activity and reverberate to the benefit of profits. The argument runs as in the previous paragraph until an increased level of income is proved a consequence; then the conclusion is drawn that higher aggregate profits will accompany the higher income level. Whether or not the last step of this argument is taken with tongue in cheek, it is interesting to see whether total profits can be raised through decreasing the relative profit share of income and, if they can, what the conditions are under which they may be so increased and whether these conditions may likely prevail. Mathematically it can be shown that there are conditions, extreme but not unreasonable conditions, under which the raise profits through higher wages argument is valid; the conclusions mathematically arrived at can be demonstrated verbally. The analysis here is entirely static: the values of all economic variables are assumed to be mutually determined by simultaneous solution of demand functions and economic identities. For simplicity, all functions are taken as linear. The conclusions can be stated as follows: 1. So long as government expenditure and investment are constant a rise in wage rates at the expense of profits will increase aggregate income but decrease profits, if the marginal propensity to consume out of is less than unity. 2. When we complicate our system by admitting relationships between, e.g., investment and income, or government expenditures and

THE graphic method of determining the level of income which is consistent with a consumption function and given investment is familiar to most students.1 The method is that of plotting the aggregate demand function (consumption demand function with investment superimposed vertically) against national income; the intersection of this line with a forty-five degree line through the origin indicates the level of income at which income equals assumed investment plus derived consumption. But this forty-five degree line method suffers from the disadvantage that consumption must explicitly be related to the national income or gross national product. It is common nowadays to assume that consumption is related to disposable income, and to assume as well that taxes, government transfer payments, and corporate savings are themselves related to gross national product, so that the consumption-gross national product relationship is a derived one. In the graphic solution as ordinarily presented, a change in the tax structure cannot be assumed without having the shape of the derived consumption-GNP relationship affected. So, where graphic methods are desired, an elaboration that allows separate manipulation of the tax function and the consumption function is of some advantage. This paper will present a graphic method which goes one step further than the forty-five degree line method, that is, one which portrays the solution when consumption is explicitly related to disposable income, the latter being explicitly related to the gross national product.2 The method is simple. We have two relationships, here assumed linear for convenience. One is the consumption-disposable income relationship, in the form C a + bDI, in which the parameter b measures the marginal propensity to consume. The other is the disposable income-gross national product relationship, in the form DI = c + dGNP, where the parameter d measures the marginal ratio of DI to GNP.3 Both these relationships are plotted on Chart i. Measuring GNP along the horizontal

Nobel Prize Lecture, December 8, 2005

The greenhouse effect itself is simple enough to understand and is not in any real dispute. What is in dispute is its magnitude over the coming century, its translation into changes in climates around the globe, and the impacts of those climate changes on human welfare and the natural environment. These are beyond the professional understanding of any single person. The sciences involved are too numerous and diverse. Demography, economics, biology, and the technology sciences are needed to project emissions; atmospheric chemistry, oceanography, biology, and meteorology are needed to translate emissions into climates; biology, agronomy, health sciences, economics, sociology, and glaciology are needed to identify and assess impacts on human societies and natural ecosystems. And those are not all. There are expert judgments on large pieces of the subject, but no single person clothed in this panoply of disciplines has shown up or is likely to. This article makes an attempt to forecast the economic and social consequences of global warming due to anthropogenic greenhouse gases, and attempting to prevent it.

One of the sophisticated financial arrangements available at your neighborhood bank is Savings. In this plan you are committed to regular weekly deposits until some date in November when all the money is there with accumulated interest to spend for Christmas. It doesn't accumulate quite as much interest as regular savings. The reason people accept less interest on Christmas savings is that the bank protects these funds a little more than it protects ordinary savings. Regular savings are reasonably well protected against robbery, embezzlement and insolvency; and insurance takes care of what protection cannot do. But there is one predator against whose ravages the bank is usually impotent-you. With a Christmas account, the bank assumes an obligation to create ceremonial and administrative barriers to protect your account from yourself. Some people cheat on the withholdingtax forms they fill out for their employers. They understate their dependents, so that the Internal Revenue Service takes more than it deserves all year-a free loan from the taxpayer-in return for which the taxpayer gets a reduced shock the following April. Many of us have little tricks we play on ourselves to make us do the things we ought to do or to keep us from the things we ought to foreswear. Sometimes we put things out of reach for the moment of temptation, sometimes we promise ourselves small rewards, and sometimes we surrender authority to a trustworthy friend who will police our calories or our cigarettes. We place the alarm clock across the room so we cannot turn it off without getting out of bed. People who are chronically late set their watches a few minutes ahead to deceive themselves. I have heard of a corporate dining room in which lunch orders are placed by telephone at 9:30 or 10:00 in the morning; no food or liquor is then served to anyone except what was ordered at that time, not long after breakfast, when food was least tempting and resolve was at its highest. A grimmer example of a decision that can't be rescinded is the people who have had their jaws wired shut. Less drastically, some smokers carry no cigarettes of their own, so they pay the higher price of bumming free cigarettes. In these examples, everybody behaves like two people, one who wants clean lungs and long life and another who adores tobacco, or one who wants a lean body and another who wants dessert. The two are in a continual contest for control; the iistraight one often in command most of the time, but the wayward one needing only to get occasional control to spoil the other's best laid plan. As a boy I saw a movie about Admiral Byrd's Antarctic expedition and was impressed that as a boy he had gone outdoors in shirtsleeves to toughen himself against the cold. I resolved to go to bed at night with one blanket too few. That decision to go to bed minus one blanket was made by a warm boy; another boy awoke cold in the night, too cold to retrieve the blanket, cursing the boy who had removed the blanket and resolving to restore it tomorrow. The next bedtime it was the warm boy again, dreaming of Antarctica, who got to make the decision, and he always did it again. I didn't realize then how many contests of that kind, some pretty serious, I would eventually have with myself, trying to stop smoking, to exercise, to study for an examination, to meet a deadline, or to turn off an old movie on TV. At a gathering like the annual meeting of the American Economic Association most of us are exquisitely aware of that form of academic delinquency that is probably our greatest occupational hazard: We cannot make ourselves write those papers, articles, and dissertations *Harvard University.

The memorandum is about the segregation that can result from discriminatory individual behavior. It examines some of the individual incentives, and perceptions of difference, that can lead collectively to segregation. It also examines the extent to which inferences can be drawn, from the phenomenon of collective segregation, about the preferences of individuals, the strengths of those preferences, and the facilities for exercising them.